Instability has returned to bitcoin (BTC/USD) after an impressive streak of gains that saw it once again challenge the $300 mark and climb well above its 50-day moving average (MA).
Last week’s sudden drop all but erased the hard earned gains and casts further doubt on the likelihood of a bottoming and eventual recovery. Bitcoin has faced much resistance in its quest to overcome the psychologically significant $300 mark, although it has also been pulling further away from lows established earlier this year.
The coming weeks during March and April, traditionally volatile months, will likely set the tone for bitcoin’s direction for the next quarter.
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One of the challenges will be if it can build momentum on its own merits, even in the absence of a steady flow of positive news in the industry.
Last week’s sharp drop saw bitcoin lose as much as 16% to $243, a 3-week low, in a 48h span. At its low, from which it quickly recovered, bitcoin was actually trading below its 50-day moving average (MA) for the first time in 3 weeks. Prior to the drop, the MA had actually begun to trend higher for the first time since last July, adding to the effects of the sudden drop.
Bitcoin is currently trading at $259 on BTC-e, within $1.00 (0.4%) of its traded price on other USD exchanges.